Business Today

'The debt crisis will take five to seven years to resolve'

Sanjiv Shankaran | Print Edition: Dec 25, 2011

Jitendra Sharma, the US-based Principal, Advisory Services, KPMG LLP, has a challenging job: managing risk. In India recently meeting clients, Sharma spoke to Sanjiv Shankaran on the debt crisis and what is in store. Edited excerpts:

On 2008 versus 2011: Same movie but a different chapter. In 2008, the system led to a number of banks failing. A lot of leverage was taken out of the banking system and put on the balance sheets of governments. That led to sovereign debt crisis.

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On the financial sector:
Whether we like it or not our daily lives are intertwined with the financial sector. Credit is the bellwether for the economy in a more efficient way.

On debt crisis' solution: Political situation is inevitably intertwined with the economic situation. There are two different paths. Hence, the precarious situation. I think the situation we are in today will take five to seven years to resolve.

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On emerging markets:
They recognise that they were fortunate. They realise that they are not immune to global forces. Reality is many of the banks realise that in the longer term their destinies are intertwined with what is happening in more developed economies.

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